For various reasons, I owe a substantial amount in back taxes. I’ve heard you talk about the Offer in Compromise program. How does it work, and how do I know if I am eligible to use it?
The Offer in Compromise program has a specific purpose for a specific taxpayer. To understand how it works and why it’s used, it can be helpful to understand the history.
For years, IRS agents spent countless man hours trying to track down deadbeat taxpayers and force them to cough up what they owe. Some taxpayers avoided the IRS because they didn’t want to pay. Others avoided the tax-collecting agency because they couldn’t pay.
That second group is important. The IRS discovered that being more flexible can be a more effective strategy in some cases, particularly with taxpayers who want to settle their tax debt but lack the financial wherewithal to do so.
Enter the Offer in Compromise program. With this program, taxpayers who amassed substantial tax debt but do not, and will not, have the financial resources to settle can make a compromise offer that will settle their debt once and for all.
If you’re among these taxpayers, the first thing you should do is consult a qualified tax professional. He or she will go over your previous returns with a magnifying glass to ensure that you do not pay the IRS even a penny more than you owe.
Once your tax figure has been established, you and your tax professional will make an offer to the IRS to settle your debt. Oftentimes, this amounts to significantly less than the amount owed! Truly, it is that simple.
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Tags: Back Taxes, Offer in Compromise
